specific action plan for launching tcbs branch in 2011

ABBREVIATIONS AND ACRONNYMS ABS AN BINH Securities Joint Stock Company ACBS ACB Securities Company Ltd BVSC BAOVIET Securities Joint Stock Company CPI The Consumer Price Index FPTS FPT S

completion of this research

I wish to express my profound thanks and appreciation to Dr Le Nguyen Hau, my study Tutor, for his invaluable guidance, constructive suggestions and constant encouragement throughout this study work His support and understanding made this study a rewarding experience to me

Among my professional colleagues, I am grateful to my colleagues at Techcomsecurities Company – Nguyen Trung Kien, Nguyen Duc Hung, and Dao Thanh Tung – for their help, stimulation and feedback I also owe a special thank to

Mr Nguyen Trung Hau – my mentor – for providing advices and resources for me

to fulfill my study

Special thank are expressed to all professors from Solvay Business School and Ho Chi Minh City Open University as well as my classmates for their supports via lectures, discussions, debates, comments and feedbacks throughout my all Master program

I gratefully acknowledge the encouragement from members of my family to my studying

TABLE OF CONTENTS

Abbreviations And Acronnyms

Tables, Chart & Figures

EXECUTIVE SUMMARY

CHAPTER I INTRODUCTION

ii iii

ABBREVIATIONS AND ACRONNYMS

ABS AN BINH Securities Joint Stock Company

ACBS ACB Securities Company Ltd

BVSC BAOVIET Securities Joint Stock Company

CPI The Consumer Price Index

FPTS FPT Securities Joint Stock Company

GDP Gross Domestic Product

HBBS HABUBANK Securities Company Ltd

HOSE Ho Chi Minh Stock Exchange

HSC HOCHIMINH CITY Securities Corporation

KEVS KIMENG VIETNAM Securities Joint Stock Company OCS OCEAN Securities Joint Stock Company

SBS SACOMBANK Securities Joint Stock Company

SSI SAIGON Securities Incorporation

TCBS Techcomsecurities Company

TSC THANGLONG Securities Joint Stock Company

UPCoM The Unlisted Public Companies Market

VCBS Vietcombank Securities Company Ltd

VIETINBANKSC Vietnam Bank for Industry and Trade Securities Joint

Stock Company VIS VIETNAM INTERNATIONAL Securities Joint Stock

Company VNINDEX Vietnam Index of stock price

TABLES, CHARTS & FIGURES

TABLES

Table 4.1: The marketing budget can be spent maximum in theory 25

Figure 2.3 Number of securities companies in Vietnam 10

EXECUTIVE SUMMARY

Techcomsecurities Company (TCBS) was found in early 2010 Due to the infancy of the company itself together with the negative impact of the global financial crisis, TCBS is facing a great of difficulties and challenges So a marketing plan for a new branch of TCBS in Hochiminh city plays an important role in ensuring proper direction for business development

Through analyzing in depth of current macro-economic situation and securities market in Vietnam that helps identify opportunities and threats for the development of securities companies

In recent year, the Vietnam’s economy has face challenges because of the heavy global economic crisis In addition, securities companies are facing the local and regional competition The competition will be increasingly fierce with the appearance of experienced foreign competitors with tremendous financial strength

in the years to come Although having challenges Vietnam stock market still has opportunities When the crisis is over, there will be a fast growth of securities industry, promoting the economic development of the country Besides, securities industry has caught greater awareness and participation of all types of investors due

to the joining of new entrants in the stock market

TCBS is owned by Techcombank - one of the leading banks in Vietnam So TCBS inherits sophisticated competency mostly from Techcombank Drawing out SWOT for the company itself helps to determine TCBS’s strengths and weaknesses

to find out the market penetration strategic plan in the fist two years and the enhance large scale plan in the next three years These plans is done through marketing mix strategy including Products, Price, Place, and Promotion

Moreover, the company put out a specific action plan for launching branch in

Ho Chi Minh City This creates preconditions for sustainable development for the company

CHAPTER I INTRODUCTION 1.1 Background

In the past 10 years Vietnam securities market has grown strongly in scale and quality The official Vietnam securities market includes Ho Chi Minh Stock Exchange (HOSE) established in July 2000, Hanoi Stock Exchange (HNX) in March 2005 and the unlisted public companies market (UPCoM) in 2009 Vietnam securities market now has the market capitalization volume of 38 billion USD, accounting for 40 percent of GDP There are many leading companies that have been trading stock in HOSE The value and volume of trading have increased steadily over the years As at end June 2010, there were 243 stocks, 58 bonds, 04 fund certificates being listed in HOSE with market capitalization of over VND560 trillion (US$ 30.31 billion) Up to now HOSE has 104 securities companies (Securities) members compared with only 4 companies in 2000 The current companies have a total capital of over VND 23 trillion, and most of them are already involved in transactions online

1.2 Company Description

Techcomsecurities Company (TCBS) was founded in early 2010 with the goal of being ranked as one of Top 10 securities companies in five years more, and delivering a diversity of products and services under sole ownership of Techcombank Currently, Techcombank is 20% owned and supported by HSBC As one of the leading banks in Vietnam, Techcombank has constantly put great efforts

to sustain this position in Vietnam securities market The company is focusing on technology investment, diversifying products, improving services, exploring and developing the new market segments By inheriting Techcombank’s strengths and brand name, TCBS is believed to quickly gain reputation and achieve market share

in Vietnam securities market

1.3 Problem statement

The securities market has made outstanding growth after 10 years of operation The market will be attractive because the Government will speed up the equitization process of big state owned general corporations, which means more valuable commodities will be available The number of new trading accounts has increased approximately 50% in 2009 and achieved 730,000 accounts The transaction accounts have increased seven times compared with figures in 2006, but

it only makes up 0.9% of the total population of Vietnam The number of listed companies has reached to 459 companies by the end of 2009, compared with around

200 companies in 2006 There are currently more than 100 securities companies, mostly in Hochiminh City and Hanoi Capital It is forecasted that securities companies would be merged to be the larger ones, at least with medium scale However, due to the infancy of the company itself together with the negative impact

of the global financial crisis, TCBS is facing a great of difficulties and challenges

In order to survive through this tough situation and prepare for a future development, TCBS needs to focus on technology and develop competitive products and services The expansion of operation area in Hochiminh City is one of the first steps forward in TCBS’s plan of strong development Given this context, the development of an effective marketing plan for TCBS in Ho Chi Minh City is important to help the company get more market share and create good image and reputation in Vietnam stock market

The following questions need to be addressed:

1 What are the opportunities, threats, strengths, and weaknesses of TCBS to find out what should be done to exploit the strengths and stop the weaknesses?

2 What need to do for the successful establishment and taking into operation of TCBS branch in Ho Chi Minh City?

1.4 Objective

The objective of this study is to develop a marketing plan to provide a road map and specific guidelines for TCBS to achieve its business development goals in Hochiminh city in the next five years

1.5 Scope of works

This project is mainly for the operation of TCBS in Ho Chi Minh City from 2011-2015 It is developed in the given context of the general corporate strategy of TCBS in Hanoi, which emphasizes on offering convenient and secure products and services

1.6 Method

The study is based on both types of data namely primary and secondary data

Primary data: In-depth interviews with the Investment Manager - Nguyen

Trung Hau, the General Manager - Nguyen Trung Kien and some functional managers of TCBS to obtain information on the firm’s current situation and their assessment about the current industry’s environment

Secondary data: Data was collected from macro and industry analysis

reports, database of historical data resource of the securities market, the company’s reports, research companies, internet, government offices, newspapers, etc…

Data analysis

Once the data has been collected, the researcher has used an inductive pattern to analyze the data collected by means of primary and secondary sources

The data analysis basically consisted of the following components:

• The first component relates to the macroeconomic environment in Vietnam It is indeed necessary for the proper understanding of the growth and development of Vietnam economies and stock market

• The second component covers an in-depth internal analysis of TCBS, then drawing out SWOT for the company itself

• The third component reveals the qualitative analysis that presents in detail the marketing plan 2011-2015 for TCBS as well as the comprehensive action plan The final evaluation of the marketing plan is also mentioned

1.7 Structure of study

The structure of the study is as follows:

The first chapter presents the overall introduction of the study including overall background, company description, problem statement, objectives, scope of works, methodology and structure of the study The second Chapter analyzes in depth of current macro-economic situation and securities market in Vietnam that helps identify opportunities and threats for the development of securities company

in general, and then point out TCBS’s strengths and weaknesses in particular A marketing plan 2011- 2015 for TCBS as well as marketing programs is presented in Chapter 3 Chapter 4 shows the detailed action plan for launching branch, budget and evaluation method Last but not least, the conclusion Chapter will grasp what is analyzed and discussed in the study and make final conclusion on the topic

CHAPTER II ENVIRONMENTAL ANALYSIS 2.1 External Environment Analysis 2.1.1 Macro level: SLEPT Model Analysis

There are many factors in the macro-environment that will be a great

leverage but also a threat to financial industry in general and securities market in

particular These factors include Social, Legal, Economic, Political, Technological

factors (SLEPT)

Social factors:

With the population of over 86 million, 2/3 of which are below 30 years of

age, Vietnam has enormous young human resource The country records in

continued improvement in key human development indicators such as high literacy

rates of above 90% education, health improvement, life expectancy, and impressive

poverty reduction The workforce is highly motivated, adaptable and has strong

work ethic Compared with other countries in the region, Vietnam still have low

labor cost This can be proved by the extremely low Gross Net Income per Capita of

Vietnam in 2009 with only US$1,010 compared to US$37,220 of Singapore or

US$3,760 of Thailand Besides, it is worth mentioning that there are an increasing

number of students choosing economics and finance as their majors rather than

technology and manufacturing at the Universities According to the Vietnam

Ministry of Education, 38 percent of students have applied in the commerce schools

in 2010 (Source: on website Admission Information) .These young, qualified students would be

skilled workforce considered as human supply or prospective clients as market

demand for TCBS in near future Furthermore, they would become potential

customers due to their knowledge in business Generally, social factors of Vietnam

are proved to be very positive not only to finance sector but also to other industries

Legal factors:

In term of financial market: Vietnam Securities Law came into effect in 1

January 2007 and amended in November 2010; the Decree No.14 and series of

regulations on fund management, securities operation are issued, and they are going

to be amended in near future In a bid to improve liquidity yet still control main fields in the economy, the government has raised the foreign ownership limit for equities to 30% for banking and 49% for other sectors and totally removed foreign ownership limit of a particular issuer’s bonds Admittedly, Securities Law is a major step to improve information disclosure and corporate governance for all public companies, so as to shape an effective regulatory framework for the stock market development in Vietnam In conclusion, this legal improvement really means to securities companies, especially those newly found like TCBS since it helps create a transparent market, and above all a fair playground for everyone

Economic factors:

Vietnam is considered as an impressive growth since the “Doi Moi” reform, emerging as a major financial hub in the region with strong and consistent growth over 8% during 2005-2007 and sliding 6.23% in 2008 due to the global crisis Up to

2009, GDP growth is 5.23%, and it is ranked the first in Asia region

Figure 2.1: Vietnam’s GDP from 2002 to 2009

430 482 528

625 704

823 1024 1200 8.44

6.23 7.1 7.3

7.7

5.32

8 8.48

0 200 400 600 800 1000 1200 1400

2002 2003 2004 2005 2006 2007 2008 2009

0 1 2 3 4 5 6 7 8 9

GDP per capita (US$) GDP Growth (%)

(Source: General Department of Statistics)

Figure 2.2: Vietnam’s CPI from 2000 to 2010

Since 2001 average CPI has been 8.1% one of the highest in Asia

(Source: TNS Research Company)

Inflation is in the control below 7% in 2009, on the average the consumer price index (CPI) decrease compared with the previous years However, since 2001 average CPI has been 8.1% one of the highest in Asia (Source: TNS Research Company)

Political factors:

Vietnam’s entry to WTO in November 2006 has far-reaching implication from lower trade barrier for goods to more competitive business environment and the adoption of an array of laws and regulations Vietnam Government has committed to reform such as development of private sector, privatization of state owned companies, infrastructure development Banking Law (1998), Investment Law, Enterprise Law (2005), Securities Law (2006) and other administrative regulations gradually come into effect as Vietnam’s strenuous efforts to strengthen the financial mechanism to help generate domestic and foreign resource, improve transparency for business environment Vietnam is ranked as one of the most Asian stable countries on politics Multinational companies consider Vietnam as a safe and lucrative investment destination in comparison with other countries in the region As a result, Vietnam securities market is likely to enjoy such abundant foreign indirect investment and has more chances to develop in the years to come

In short, although difficulties and challenges are still ahead, there is a room for hope that Vietnam with strenuous efforts can overcome such economic obstacles, becoming an Asian tiger in coming future Admittedly, this rather promising macro-environment can enhance Vietnam to be an attractive investment destination top in mind of foreign investors It can be said that the mentioned SLEPT including young qualified workforce, effective regulatory framework, impressive economic growth, stable political environment, modern trading system have together contributed to a very promising business environment for securities companies in general and TCBS in particular The problem remains in whether industry factors are also favorable to the development of securities companies This will be clearly presented in the following part

2.1.2 Industry level: Porter's 5 forces

The competitive structure of securities industry can be analyzed using Porter's five forces including rivalry amongst existing competitors, bargaining power of buyers, bargaining power of suppliers, threat of substitute products and threat of new entrants

Rivalry amongst exiting competitors: “high”

When Vietnam Index of stock prices (VNINDEX) reached the peak of 1,170

on March 12, 2007, the stock market was then shared among 60 securities companies Accompanied with the nearly 70% decrease in the value of VNINDEX

is the dramatic boom of securities companies which stood at 104 companies in

2010 These two contradictory pictures represent the stiff competition among the existing companies

Figure 2.3 Number of securities companies in Vietnam

Number of Securities Company in Vietnam

55 78 91 104

0 20 40 60 80 100 120

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

c

(Source: Techcomsecurities statistic book)

Vietnam Capital market is divided into Securities market and Bond market

In term of Securities market, in 2009, the top 10 companies accounted for 51.26%

of brokerage market share Therefore, the small remaining “cake” is modestly shared for 90 companies The increasingly fierce competition happens in Bond market which is playing field of state-owned companies who have closely relationship with the Government In 2009, the top 10 concentration rate was 92.75% of brokerage market share

Figure 2.4 VN brokerage market share - 2009

Brokerage Market Share on Securities in 2009

(Source: Vietnam State Securities Commission Annual Report 2009)

Referring competitive advantages of some top securities companies, Thanglong Securities (TSC), Hochiminh Securities (HSC), KIM ENG Securities, Sacombank securities are of powerful brokerage while BaoViet Securities is known

as a great corporate finance services provider Others like FPT securities and VNDIRECT securities are good at technology and utilities for investors Saigon Securities (SSI) is diversifying client portfolio and services The Vietcombank securities (VCBS) is focusing on bond trading TCBS needs to take this fact into consideration, to point out which path the company is able to catch up with This company’s internal strength will be discussed more detail in the later part

In short, the competition among players is severer than ever Most of market share are dominated by big boys whose have advantages of early establishment or cooperation with foreign strategic partners Smaller or newborn companies find it extremely difficult to penetrate in the current highly concentrated market Thus, rivalry amongst existing competitors is “high”

Threat of substitute products: “high”

There is an increasing recognition that Vietnam has put great deal of effort in developing into a market economy Stock market has become key indicator of economic performance, not only helps mobilize capital to invest in business but also ensure these resources bring best profits in the future Its economic necessity is apparent, but there appears a threat from other attractive investment channels such

as gold trading and real estate These two alternative kinds of investment are

currently paid special attention due to their high fluctuation and ease of trading The investors now find it very easy to shift among these investments to get arbitrage So the threat of substitute products is “high”

Bargaining power of buyers: “high”:

First, the value customers who have high requirements in financial products and services are obtained by large securities companies The medium and small income investors’ demands for services are not as strict as that of large or institutional investors whom only large securities companies are able to serve This means that the current 104 securities providers are in an intense competition as investors especially medium and small one quite easily shift among them in order to enjoy better services at low fees The ins and outs of contractual requirement are not so stringent, which partly contributes to the investors’ movement to other companies

To conclude, the power of buyers/customers is considered “high”

Bargaining power of suppliers: “high”

As for securities companies, suppliers will be administrative organizations such as Ministry of Finance, State Securities Commission, Ho Chi Minh Stock Exchange, Hanoi Stock Exchange, and Vietnam Securities Depository

Chart 2.1 Admin Structure of VN capital market

(Source: Vietnam Ministry of Finance)

The State Securities Commission (SSC) is an executive arm of the Ministry

of Finance (MoF) that directly implements the MoF’s legal regulations and guidelines, also, controls the financial market Ho Chi Minh Stock Exchange, Hanoi

Stock Exchange is administrative agencies of SSC having functions of organizing, regulating, operating and inspecting securities trading activities and stock market’s activities at a national level Once securities companies satisfy requirements or obey regulations and principles from these “powerful suppliers” are they allowed to be established or continue operation The fact leads to the conclusion that bargaining power of suppliers is high

Threat of new entrant: “medium”

The highly concentrated market accompanied with the current sliding economy has made it difficult for new players to enter the game Besides, the high entry cost of heavy investment in advanced trading systems and communication network, to a certain extent, has discouraged those who want to get a small bit of cake Since the beginning of 2009, State Securities Commission of Vietnam has imposed a restriction on granting establishment license for new securities companies (Source: Decision 126/2008/QD-BTC published at the end 2008 by Vietnam State Securities Commission)

The barrier to entry also comes from the Securities Law effective as of 1 January 2007 that representative office, foreign securities companies can invest

in Vietnam in the form a joint venture with up to 49% foreign ownership Only after 2011, foreigners will be able to own 100 percent of securities firms and will be able to branch into Vietnam for some securities activities As a consequence, there is a threat of so experienced competitors with tremendous financial strength since 2011 The plan of improving services, human, financial capacity, technology for existing securities companies should be taken into consideration right now To sum up, threat of new entrant is “low” at the present, yet may be “medium” in the long run In the Porter's five forces analysis that most

of factors are negative, take medium threat of new entrants or high threat of substitute products and high bargaining power of buyers for example The high bargaining power of suppliers is not serious because such necessary principles and regulations are set by the regulators (suppliers) to ensure the transparency, fairness

of the market However, it is worth to mention that the high industry competition

prevents existing securities companies from generating high returns The case turns out to be more difficult in the current global economic crisis Securities companies should pay due attention to develop effective strategies to overcome difficulties, then, take opportunities in the future

2.2 Internal Analysis

Company background

Techcomsecurities was established in September 2008 with the capital of VND 300 billion owned by Techcombank Techcomsecurities performs stock trading operations, including Securities Brokerage, Proprietary Trading, Securities Depository and Finance Advisory

Overview of Techcombank

Vietnam Technological and Commercial Joint- stock Bank - Techcombank

has been operating for 16 years Currently, Techcombank is one of the Leading Commerce Joint Stock Bank in Vietnam with property of more than 107,910 billions VND (end of June 2010) Techcombank has strategic shareholder HSBC with 20% share holdings With network of 230 branches, Transaction offices at more than 40 provinces and cities within the country, Techcombank expects to continue expand, increase the number of branches and offices to 300 national wide

at the end of 2010 Techcombank is also the first and the only bank has Financial Insight give the Title of Leading Bank in technology solution and application Currently, with more than 5000 staff, Techcombank is always ready to satisfy all the requirements and provide services to customers Techcombank is now serving more than 1 millions of individual customers, and nearly 42.0000 business customers

Resource:

Techcomsecurities was founded by the legal entities with great histories of success in the fields of Banking, Consultancy and Financial/ Securities Investment Therefore, Techcomsecurities inherits sophisticated competency mostly from

Techcombank Admittedly, technology, trading fee, human resource are considered

as an important prerequisite to successful securities company Referring the specific case like Techcomsecurities, the company has a number of highly-skilled managers mainly coming from its supporter -Techcombank Needless to say, this professional workforce has been toughly selected, receiving thorough training and staying updated with the latest knowledge and news of Finance and Securities However, in order to ensure the long-term success, TCBS must continue investing in human resource instead of relying on Techcombank In term of technology, TCBS is currently investing in a technological system called BOSC that can ensure the accuracy and comply with the trading rules and regulations but is unable to quickly handle a great number of investors’ orders Concerning trading fee, it can be said that TCBS has been applying a very competitive trading fee that is 0.15% per every transaction value compared to average 0.25% per transaction value under 500 billion VND (Source: Trading Fee Table of securities companies) in the market This fee will not be likely preferred by institutional or large investors as they are enjoying 0.1% of trading fee by almost top securities companies at the present To sum up, with current valuable resource, TCBS is quite able to achieve its target and business goals